TOKYO -- When it comes to hybrid vehicles, the name of the game is volume. Cranking up sales cuts the cost of the pricey batteries those cars need -- which in turn feeds more sales.
Now the Japanese government is doing its bit to give its homegrown carmakers -- already the world leaders in hybrid technology -- an extra leg up in the domestic market. The move should serve as an example to the U.S. government and as a warning to foreign rivals worried about Japan’s home court advantage.
Japan’s Ministry of Economy, Trade and Industry, or METI, wants hybrid and electric vehicles to account for 50 percent of new-car sales in Japan by 2020, Japanese media report.
It’s a lofty goal indeed. Even in Japan, the world’s most receptive market to hybrids, many experts don’t expect penetration of electrified vehicles to reach 20 percent in that time frame.Toyota hybrids account for roughly 9 percent of today’s market, by that company’s count.And sales of hybrids from Honda and other carmakers add an incremental increase.
But METI isn’t planning to sit still.
It aims to realize its goal through incentives meant to boost next-generation car sales and liberal spending on charging stations around Japan for the coming wave of plug-in hybrids and electric cars. It is also studying ways to promote domestic r&d and production of electrified drivetrains.
METI has already earmarked 12.6 billion yen ($135.3 million) in 2010 to build recharging stations across Japan, a fivefold increase over 2009 funding levels, Japan’s Nikkan Kogyo newspaper says.
It’s another classic example of Japanese government and industry working together for a common cause. It’s a model that has worked for decades and can still be potent.
Critics of hybrid and electric cars cite their high cost and the efficiency of alternatives, such as diesel engines, as reasons why the technology won’t go mainstream anytime soon.
But with the Japanese market acting as an incubator, the technology could garner enough scale to bring down costs for other markets as well. Diesel is all but unheard of in Japan, and isn’t likely to emerge as a serious competitor -- especially without the government’s backing.
Toyota is banking on it. The world’s biggest automaker offers 12 hybrid models in Japan, compared with seven in the United States, to build scale for battery and parts production. Last year, it sold 251,000 hybrids in Japan, compared with 200,000 in the United States.
Toyota’s recent deal to supply Mazda with hybrid technology is another step toward volume.
Japan Inc.’s intent to promote the hybrid and electric technology is ample notice that the world’s No. 3 auto market is throwing its weight behind it. It’s time to take the trend seriously.